DEF 14A of Mcdonalds Corp, Apr 9, 2020

DEF 14A of Mcdonalds Corp

Filed Apr 9, 2020 · FY20190001206774-20-001117

Open on EDGAR

  1. 2019 COMPENSATION PROGRAM SUMMARY

    | | Key compensation elements and % of CEO pay opportunity | | Primary metrics | Key terms | | | Base Salary | | N/A | ●Decided based on competitive considerations, scope of responsibilities, individual performance, tenure in position, internal pay equity and the effect on our general and administrative expenses | | | | | | | | | Short-Term Incentive Plan | | ●Operating income growth ●Comparable guest count growth | ●Rewarded growth in annual operating income, which required the Company to balance increases in revenue with financial discipline to produce strong margins and a high level of cash flow ●As a core metric, comparable guest count growth promoted the long-term health of our business and supported income growth ●As the sole modifier, delivery sales were closely aligned with a key business strategy and encouraged the continued transition of our delivery initiative from restaurant deployment to growth ●Individual STIP payouts were limited to 200% of the target award | | | Long-Term Incentives | | | | | | | Performance-Based Restricted Stock Units (RSUs) | ●Earnings per share (EPS) growth ●Return on incremental invested capital (ROIIC) | ●Provided the right to receive a share of McDonald’s stock at the end of a three-year service period, subject to the Company’s achievement of two key financial metrics, EPS and ROIIC ●Also subject to a modifier based on total shareholder return over the performance period compared to the S&P 500 Index ●Individual RSU payouts were limited to 200% of the target award | | | | Stock Options | ●Share price | ●Provided value only if our share price increased (with an exercise price equaling the stock price on the grant date), which closely aligned executive pay with shareholder interests ●Will vest ratably 25% per year with a 10-year term |

  2. 2020 COMPENSATION PROGRAM CHANGES

    2020 COMPENSATION PROGRAM CHANGES Our Compensation Committee’s review of our incentive program confirmed overall alignment with our compensation guiding principles. However, to further align our STIP with our current business goals and shareholder interests, for 2020, we added Systemwide sales growth as a core metric and removed the delivery sales modifier. Systemwide sales is important in a franchise business as income generation is closely correlated to sales growth. Our three performance metrics for 2020 STIP are operating income growth (weighted 50%), comparable guest count growth (weighted 25%) and Systemwide sales growth (weighted 25%), with no modifier. For more information, see the CD&A at page 49.

  3. 2020 COMPENSATION PROGRAM CHANGES

    | 12 | | McDonald’s Corporation |

  4. 2020 COMPENSATION PROGRAM CHANGES

    | ELECTION OF DIRECTORS |

  5. 2020 COMPENSATION PROGRAM CHANGES

    | PROPOSAL 1 | | | | | | | | | Election of Directors | | | | | | | | | Our Board of Directors recommends the following 12 nominees for election to our Board of Directors for a one-year term beginning in May and continuing until the 2021 Annual Shareholders’ Meeting and until their successors have been elected and qualified: | | | | | | | | | 1. | Lloyd Dean | 4. | Margaret Georgiadis | 7. | Richard Lenny | 10. | John Rogers, Jr. | | 2. | Robert Eckert | 5. | Enrique Hernandez, Jr. | 8. | John Mulligan | 11. | Paul Walsh | | 3. | Catherine Engelbert | 6. | Christopher Kempczinski | 9. | Sheila Penrose | 12. | Miles White | | | Our Board recommends a vote FOR each of the 12 Director nominees. | | | | | | |

  6. 2020 COMPENSATION PROGRAM CHANGES

    With the exception of our CEO, all Director nominees are independent. Our Board expects all nominees to be available for election. If any of them becomes unable to serve at any time prior to the Annual Shareholders’ Meeting, our Board may substitute another person as a nominee or may reduce the number of Directors to eliminate the vacancy. If you have voted for the unavailable nominee, your shares will be voted for any substitute nominee. Nominees who receive a majority of the votes cast will be elected. If any Director does not receive a majority of the votes cast, he or she has tendered an irrevocable resignation that, subject to our Governance Committee’s recommendation and our Board’s acceptance, will be effective following the Annual Shareholders’ Meeting. Director Qualifications Our Board is a diverse, highly-engaged group of individuals that provides strong, effective oversight of the Company. Both individually and collectively, our Directors have the qualifications, skills and experience needed to inform and oversee the Company’s long-term strategic growth priorities, including our Velocity Growth Plan. Importantly, each Director has senior executive experience, in many cases having served as CEOs or high-level executives of large, complex, global organizations. Specifically, several Directors have leadership experience in the consumer goods or food sectors, which is particularly relevant to our business. Further, our Board values expertise in information technology, cybersecurity and digital initiatives, as well as global experience given the Company’s global, branded operations. These skills, along with the other skills and attributes discussed below and described more fully in the Company’s Director Selection Process guidelines, are key considerations in evaluating the composition of our Board and inform our Board’s succession planning and Director selection processes.

  7. 2020 COMPENSATION PROGRAM CHANGES

    | Our Director nominees’ individual skills and experiences are included on the following pages. In addition, all Director nominees demonstrate the following qualities: |

  8. 2020 COMPENSATION PROGRAM CHANGES

    | | KEY ATTRIBUTES AND SKILLS OF ALL DIRECTOR NOMINEES |

  9. 2020 COMPENSATION PROGRAM CHANGES

    | ●High Integrity and Values ●Proven Record of Success ●Leadership ●Strength of Character and Judgment | ●Knowledge of Corporate Governance Practices ●Human Capital / Talent Management ●Succession Planning | ●Risk Assessment and Oversight ●Intellectual / Analytical Skills ●Strategic Planning |

  10. 2020 COMPENSATION PROGRAM CHANGES

    | 2020 Proxy Statement | | 13 |

  11. 2020 COMPENSATION PROGRAM CHANGES

    In addition, our Director nominees contribute to our Board the individual experiences, qualifications, attributes and skills shown in the following matrix. The skills identified in the matrix are intended as a high-level summary and not an exhaustive list:

  12. 2020 COMPENSATION PROGRAM CHANGES

    | | | | | | | | | | | | | | | | | BRAND MANAGEMENT: Contributes to an understanding of how the Company’s business, standards and performance are essential to protecting and increasing the value of the McDonald’s brand | | | | | | | | | | | | | | | CUSTOMER-CENTRIC: Provides an understanding of the Company’s business, operations and customer-centric Velocity Growth Plan strategy, focusing on elevating the overall customer experience | | | | | | | | | | | | | | | GLOBAL EXPERIENCE: Contributes to an understanding of how the Company’s business is structured to enable the right level of support for our international markets, as well as the sharing of solutions across international markets | | | | | | | | | | | | | | | MARKETING/DIGITAL: Provides an understanding of how the Company’s traditional (dine in or drive-thru pickup) and evolving digital business models are marketed to consumers in a manner consistent with the Company’s strategy | | | | | | | | | | | | | | | INFORMATION TECHNOLOGY/CYBERSECURITY: Contributes to an understanding of information technology capabilities, cloud computing, scalable data analytics and risks associated with cybersecurity matters | | | | | | | | | | | | | | | REAL ESTATE: Provides an understanding of how owning or leasing real estate, combined with co-investment by franchisees, enables the Company to achieve high restaurant performance levels | | | | | | | | | | | | | | | FINANCE/CAPITAL MARKETS: Supports the oversight of the Company’s financial statements and strategy and financial reporting to investors and other stakeholders | | | | | | | | | | | | | | | SUSTAINABILITY/CORPORATE RESPONSIBILITY: Contributes to an understanding of sustainability issues and corporate responsibility, and their relationship to the Company’s business and strategy | | | | | | | | | | | | | | | HUMAN CAPITAL MANAGEMENT: Provides an understanding of how the Company manages and develops its workforce | | | | | | | | | | | | | | | ETHNIC/GENDER DIVERSITY: Contributes to the representation of varied backgrounds, perspectives and experience in the boardroom to support the global demands of our business and understanding of customer perspectives | | | | | | | | | | | | | | | OTHER PUBLIC COMPANY BOARD: Demonstrates a practical understanding of organizations, processes, governance and oversight of strategy, risk management, and driving change and growth | | | | | | | | | | | | |

  13. 2020 COMPENSATION PROGRAM CHANGES

    Further biographical information about each Director standing for re-election, including his or her age, committee memberships, professional experience, qualifications and other directorships is set forth on the following pages.

  14. 2020 COMPENSATION PROGRAM CHANGES

    | 14 | | McDonald’s Corporation |

  15. 2020 COMPENSATION PROGRAM CHANGES

    Biographical Information

  16. 2020 COMPENSATION PROGRAM CHANGES

    | | LLOYD DEAN INDEPENDENT Chief Executive Officer | CommonSpirit Health Age 69 | Director Since 2015 Board Committees Audit & Finance, Compensation Skills and Qualifications |

  17. 2020 COMPENSATION PROGRAM CHANGES

    | Professional Experience | Director Qualifications | | CommonSpirit Health, a non-profit, Catholic health system ●Chief Executive Officer (2019 - Present) Dignity Health, one of the nation’s largest healthcare systems ●President and Chief Executive Officer (2000 - 2019) Advocate Health Care, a healthcare organization ●Chief Operating Officer (1997 - 2000) | In his career in executive management at leading healthcare organizations, Mr. Dean has led significant strategic, operational and financial transformations. He brings over 25 years of leadership, management, healthcare and strategy experience to our Board, which contributes an important perspective to our Board’s discussion of opportunities and challenges in a constantly changing business environment. We also benefit from Mr. Dean’s finance, systems operations, service quality and human resources, customer-centric operations and community affairs expertise. In addition, Mr. Dean’s qualification as an “audit committee financial expert” is an important attribute as a member of our Audit & Finance Committee. Other Directorships Mr. Dean previously served on the boards of Navigant Consulting, Inc., Premier, Inc. and Wells Fargo & Company. |

  18. 2020 COMPENSATION PROGRAM CHANGES

    | | ROBERT ECKERT INDEPENDENT Operating Partner | Friedman Fleischer & Lowe Age 65 | Director Since 2003 Board Committees Public Policy & Strategy (Chair since 2016), Governance, Executive Skills and Qualifications |

  19. 2020 COMPENSATION PROGRAM CHANGES

    | Professional Experience | Director Qualifications | | Friedman Fleischer & Lowe, a private equity firm ●Operating Partner (2014 - Present) Mattel, Inc., a global children’s entertainment company specializing in toys and consumer products ●Chairman of the Board (2000 - 2012) ●Chief Executive Officer (2000 - 2011) Kraft Foods Inc., a packaged food company ●President and Chief Executive Officer (1997 - 2000) | Mr. Eckert’s service as a chief executive officer of large, global consumer branded and food products companies contributes to our Board’s understanding of business and product development, marketing, supply chain management and distribution, and consumer behavior. He brings experience as a senior executive of global consumer brand companies with high performance expectations. In addition, through his role on other companies’ boards, Mr. Eckert has extensive experience in corporate governance, leadership development and succession planning and finance. Other Directorships Mr. Eckert also serves as the lead independent director of Amgen Inc. and on the boards of Levi Strauss & Co. and Uber Technologies, Inc. |

  20. 2020 COMPENSATION PROGRAM CHANGES

    | 2020 Proxy Statement | | 15 |

  21. 2020 COMPENSATION PROGRAM CHANGES

    | | CATHERINE ENGELBERT INDEPENDENT Commissioner | Women’s National Basketball Association Age 55 | Director Since 2019 Board Committee Audit & Finance Skills and Qualifications |

  22. 2020 COMPENSATION PROGRAM CHANGES

    | Professional Experience | Director Qualifications | | Women’s National Basketball Association, a professional basketball league ●Commissioner (2019 - Present) Deloitte LLP, an industry-leading audit, consulting, tax and advisory services firm ●Chief Executive Officer (2015 - 2019) Deloitte & Touche LLP, audit subsidiary of Deloitte LLP ●Chairman and Chief Executive Officer (2014 - 2015) ●Partner (1998 - 2014) | Ms. Engelbert’s experience as Commissioner of a professional sports league and as chief executive officer of Deloitte LLP, which provides knowledge of global business operations, finance, leadership, brand, customer, strategy and risk management matters. Having led a firm of 100,000 professionals at Deloitte, she also brings significant experience in talent management. Ms. Engelbert previously served on the private company board of Deloitte LLP and as Chairman of Deloitte & Touche LLP, providing leadership and governance experience. She also served on the Strategic Investment, Risk, Regulatory & Government Relations, and Finance & Audit Committees of the board of Deloitte LLP. She is a Certified Public Accountant. Ms. Engelbert’s qualification as an “audit committee financial expert” is an important attribute as a member of our Audit & Finance Committee. Other Directorships None. |

  23. 2020 COMPENSATION PROGRAM CHANGES

    | | MARGARET GEORGIADIS INDEPENDENT President and Chief Executive Officer | Ancestry Age 56 | Director Since 2015 Board Committees Audit & Finance, Sustainability & Corporate Responsibility Skills and Qualifications |

  24. 2020 COMPENSATION PROGRAM CHANGES

    | Professional Experience | Director Qualifications | | Ancestry, a global family history and consumer genomics company ●President and Chief Executive Officer (2018 - Present) Mattel, Inc., a global children’s entertainment company specializing in toys and consumer products ●Chief Executive Officer (2017 - 2018) Google Inc., a global technology company ●President, Americas (2011 - 2017) ●Vice President, Global Sales Operations (2009 - 2011) | Ms. Georgiadis’ experience as a senior executive at large global businesses affords her a broad knowledge of global consumer businesses and marketing, as well as technology, digital consumer insights, e-commerce, finance, leadership, and strategy and development. She has led teams that successfully launched new products. Her knowledge in these and other areas provides critical insights to our business, particularly as our Board considers the impact of technology, digital and cybersecurity risks. Ms. Georgiadis also has over 15 years of analytical and strategic experience at McKinsey & Company, a global management and consulting firm. In addition, Ms. Georgiadis’ qualification as an “audit committee financial expert” is an important attribute as a member of our Audit & Finance Committee. Other Directorships Ms. Georgiadis previously served on the boards of Amyris, Inc. and Mattel, Inc. |

  25. 2020 COMPENSATION PROGRAM CHANGES

    | 16 | | McDonald’s Corporation |

  26. 2020 COMPENSATION PROGRAM CHANGES

    | | ENRIQUE HERNANDEZ, JR. Independent Chairman (since 2016) INDEPENDENT Chairman and Chief Executive Officer | Inter-Con Security Systems, Inc. Age 64 | Director Since 1996 Board Committees Governance, Public Policy & Strategy, Executive Skills and Qualifications |

  27. 2020 COMPENSATION PROGRAM CHANGES

    | Professional Experience | Director Qualifications | | Inter-Con Security Systems, Inc., a provider of security services to corporations, governments, diplomatic missions and non-profit organizations ●Chairman and Chief Executive Officer (1986 - Present) Nordstrom, Inc., a leading fashion retailer ●Non-executive Chairman and Presiding Director (2006 - 2016) | Mr. Hernandez is the Chairman and chief executive officer of a global security company, providing knowledge of physical and electronic security. He also has been a director of several large public companies in various industries. In particular, Mr. Hernandez served for five years as lead director and ten years as non-executive chairman and presiding director at Nordstrom, Inc., a large publicly-traded fashion retailer known for its customer service and brand management, providing him with significant experience in corporate governance, leadership development, succession planning and finance. Through his extensive experience managing complex, people-oriented organizations, Mr. Hernandez is well-suited to address the important human capital management element of McDonald’s business. Mr. Hernandez’s experience also facilitates our Board’s oversight and counsel regarding strategy and business development. Other Directorships Mr. Hernandez also serves on the board of Chevron Corporation. He previously served on the boards of Nordstrom, Inc. and Wells Fargo & Company. |

  28. 2020 COMPENSATION PROGRAM CHANGES

    | | CHRISTOPHER KEMPCZINSKI President and Chief Executive Officer | McDonald’s Corporation Age 51 | Director Since 2019 Board Committees Executive (Chair since 2019) Skills and Qualifications |

  29. 2020 COMPENSATION PROGRAM CHANGES

    | Professional Experience | Director Qualifications | | McDonald’s Corporation ●President and Chief Executive Officer (2019 - Present) ●President, McDonald’s USA (2017 - 2019) ●Executive Vice President - Strategy, Business Development and Innovation (2015 - 2016) The Kraft-Heinz Company, a packaged food company ●Executive Vice President of Growth Initiatives and President of Kraft International (2014 - 2015) ●President of Kraft Canada (2012 - 2014) ●Senior Vice President – U.S. Grocery (2008 - 2012) | Mr. Kempczinski is President and CEO of our Company, having previously served as President, McDonald’s USA, where he was responsible for approximately 14,000 McDonald’s restaurants. He first joined the Company in 2015, overseeing global strategy, business development and innovation. In these roles, he has been instrumental in accelerating growth to increase the overall value of the System. As a member of our senior leadership team since 2015, Mr. Kempczinski also was involved in the development of the Velocity Growth Plan, the Company’s strategic plan. His experience leading our U.S. business and overseeing global strategy contributes an important Company perspective to our Board. This experience strengthens our Board’s knowledge and understanding as it oversees our operations and strategy. Other Directorships None. |

  30. 2020 COMPENSATION PROGRAM CHANGES

    | 2020 Proxy Statement | | 17 |

  31. 2020 COMPENSATION PROGRAM CHANGES

    | | RICHARD LENNY INDEPENDENT Non-executive Chairman | Conagra Brands, Inc. Age 68 | Director Since 2005 Board Committees Compensation (Chair since 2019), Sustainability & Corporate Responsibility Skills and Qualifications |

  32. 2020 COMPENSATION PROGRAM CHANGES

    | Professional Experience | Director Qualifications | | Conagra Brands, Inc., a branded food company ●Non-executive Chairman (2018 - Present) Information Resources, Inc., a leading market research firm ●Non-executive Chairman (2013 - 2018) Friedman Fleischer & Lowe, LLC, a private equity firm ●Senior Advisor (2014 - 2016) ●Operating Partner (2011 - 2014) The Hershey Company, an industry-leading snacks company ●Chairman, President and Chief Executive Officer (2001 - 2007) | Mr. Lenny’s experience as a chief executive officer of a global retail food company with a major consumer brand is an asset to our Board given his knowledge of strategy and business development, finance, marketing and consumer insights, supply chain management and distribution, sustainability and social responsibility matters. He previously served in executive-level positions with Kraft Foods, Nabisco Biscuit and Snacks and the Pillsbury Company, providing him extensive experience with major consumer brands in the food industry. He also serves as Non-executive Chairman of one of North America’s leading food companies. In addition, his service as non-executive chairman of Information Resources, Inc. provides additional Board and governance experience. Other Directorships Mr. Lenny also serves as Non-executive Chairman of Conagra Brands, Inc. and on the board of Illinois Tool Works Inc. He previously served on the board of Discover Financial Services. |

  33. 2020 COMPENSATION PROGRAM CHANGES

    | | JOHN MULLIGAN INDEPENDENT Executive Vice President and Chief Operating Officer | Target Corporation Age 54 | Director Since 2015 Board Committees Audit & Finance (Chair since 2016), Public Policy & Strategy, Executive Skills and Qualifications |

  34. 2020 COMPENSATION PROGRAM CHANGES

    | Professional Experience | Director Qualifications | | Target Corporation, a general merchandise retailer ●Executive Vice President and Chief Operating Officer (2015 - Present) ●Executive Vice President and Chief Financial Officer (2012 - 2015) ●Senior Vice President, Treasury, Accounting and Operations (2010 - 2012) | Mr. Mulligan’s experience as a senior executive of a major consumer retailer has provided him with extensive experience in finance, global supply chain, operations, e-commerce, properties and human resources. His service at a retailer known for its focus on creating an exceptional guest experience brings customer-centric experience to our Board. In addition, his experience in digital and technology issues, including cybersecurity risk, is an important asset as our Board considers these topics and their potential impact on the Company. In addition, Mr. Mulligan’s qualification as an “audit committee financial expert” is an important attribute as our Audit & Finance Committee Chair. Other Directorships None. |

  35. 2020 COMPENSATION PROGRAM CHANGES

    | 18 | | McDonald’s Corporation |

  36. 2020 COMPENSATION PROGRAM CHANGES

    | | SHEILA PENROSE INDEPENDENT Non-executive Chairman | Jones Lang LaSalle Incorporated Age 74 | Director Since 2006 Board Committees Sustainability & Corporate Responsibility (Chair since 2016), Governance, Executive Skills and Qualifications |

  37. 2020 COMPENSATION PROGRAM CHANGES

    | Professional Experience | Director Qualifications | | Jones Lang LaSalle Incorporated, a global real estate professional services and investment management firm ●Non-executive Chairman (2005 - Present) Boston Consulting Group, a global management consulting firm ●Executive Advisor (2001 - 2008) Northern Trust Corporation, a financial services firm ●President, Corporate and Institutional Services (1994 - 2000) | Ms. Penrose brings to our Board extensive experience in and knowledge of investment services, banking, and real estate, all areas of significance to the Company. She is well-versed in strategy and business development, finance, and leadership development and succession planning. Ms. Penrose also has significant experience in corporate governance from her service on other public company boards, including as non-executive chairman at Jones Lang LaSalle Incorporated. In addition, Ms. Penrose co-founded the Corporate Leadership Center, a non-profit organization that partners with leading institutions to offer programs in executive leadership development. Other Directorships Ms. Penrose also serves as Non-executive Chairman of Jones Lang LaSalle Incorporated. |

  38. 2020 COMPENSATION PROGRAM CHANGES

    | | JOHN ROGERS, JR. INDEPENDENT Founder, Chairman, Co-Chief Executive Officer and Chief Investment Officer | Ariel Investments, LLC Age 62 | Director Since 2003 Board Committees Compensation, Governance Skills and Qualifications |

  39. 2020 COMPENSATION PROGRAM CHANGES

    | Professional Experience | Director Qualifications | | Ariel Investments, LLC, a privately-held institutional money management firm ●Founder, Chairman, Co-Chief Executive Officer and Chief Investment Officer (1983 - Present) Ariel Investment Trust, an investment company consisting of mutual funds managed by Ariel Investments, LLC ●Trustee (2000 - Present; 1986 - 1993) | Mr. Rogers’ experience as a long-serving chief executive officer of an institutional money management firm has given him broad knowledge of finance, leadership development and succession planning, as well as strategy and business development. Mr. Rogers’ investment management knowledge also provides a unique perspective on investor relations. Mr. Rogers also brings perspective to the Company’s corporate responsibility and community affairs initiatives, and his service on other boards such as Nike, Inc. and The New York Times Company adds global, customer-centric and brand management experience. Other Directorships Mr. Rogers also serves on the boards of Nike, Inc. and The New York Times Company. He previously served on the board of Exelon Corporation. |

  40. 2020 COMPENSATION PROGRAM CHANGES

    | 2020 Proxy Statement | | 19 |

  41. 2020 COMPENSATION PROGRAM CHANGES

    | | PAUL WALSH INDEPENDENT Chairman | Compass Group PLC* Age 64 | Director Since 2019 Board Committees Compensation, Sustainability & Corporate Responsibility Skills and Qualifications |

  42. 2020 COMPENSATION PROGRAM CHANGES

    | Professional Experience | Director Qualifications | | Compass Group PLC*, a leading foodservice and support services company ●Chairman (2014 - Present) Bespoke Capital Partners LLC*, an investment company ●Operating Partner (2019 – present) Avanti Communications Group plc, a leading satellite operator providing internet and data services ●Chairman (2013 - 2019) Diageo plc, a multinational beverage company ●Chief Executive Officer (2000 - 2013) ●Chief Operating Officer (2000) | Mr. Walsh’s experience as chief executive officer of a large multinational corporation provides substantial corporate leadership experience and knowledge of consumer-centric companies. His experience at Diageo brings broader food and beverage industry perspective. He also has held executive-level finance positions, including as chief financial officer of Grand Metropolitan Foods and Intercontinental Hotels. Throughout his career, Mr. Walsh has built success and growth at his companies through the deployment of effective brand marketing strategies, which brings valuable perspective to our Board. His background as a UK national based in London provides international diversity on our Board. Other Directorships Mr. Walsh also serves on the boards of Compass Group PLC*, FedEx Corporation and TPG Pace Holdings Corp. He previously served on the Boards of Avanti Communications Group plc, HSBC Holdings plc, Ontex Group NV, RM2 International, S.A. and Unilever PLC. | | *In January 2020, Compass Group PLC announced that Mr. Walsh will step down as Chairman and Director of Compass Group upon appointment of his successor. He also serves as Executive Chairman of Bespoke Capital Acquisition Corp., which has a class of restricted voting shares listed on the Toronto Stock Exchange. | |

  43. 2020 COMPENSATION PROGRAM CHANGES

    | | MILES WHITE INDEPENDENT Executive Chairman | Abbott Laboratories Age 65 | Director Since 2009 Board Committees Governance (Chair since 2014), Public Policy & Strategy, Executive Skills and Qualifications |

  44. 2020 COMPENSATION PROGRAM CHANGES

    | Professional Experience | Director Qualifications | | Abbott Laboratories, a global healthcare company ●Executive Chairman (2020 - Present) ●Chairman and Chief Executive Officer (1999 - 2020) | Mr. White’s service as chairman and as recently retired chief executive officer of a global healthcare company provides our Board with extensive knowledge of strategy and business development, global operations, finance, leadership development and succession planning, public policy matters, and corporate governance. Abbott’s focus on developing consumer products and technologies brings customer-centric, marketing/digital and healthcare knowledge to our Board. In addition, Mr. White contributes strong experience in addressing the needs of a global public company, as well as insights into our Board’s responsibility to oversee management and operations matters. As Governance Committee Chair, Mr. White leads our Board’s succession planning and Director candidate selection process, and he is periodically involved in shareholder engagement. Other Directorships Mr. White also serves as Executive Chairman of Abbott Laboratories and on the board of Caterpillar, Inc. |

  45. 2020 COMPENSATION PROGRAM CHANGES

    | | Our Board of Directors recommends that shareholders vote FOR each of the 12 nominees. |

  46. 2020 COMPENSATION PROGRAM CHANGES

    | 20 | | McDonald’s Corporation |

  47. 2020 COMPENSATION PROGRAM CHANGES

    | BOARD AND GOVERNANCE MATTERS |

  48. 2020 COMPENSATION PROGRAM CHANGES

    Board Leadership Our separate Chairman and CEO roles enable our independent Chairman to oversee corporate governance matters and our CEO to lead the Company’s business. Independent Directors also chair our Board Committees, other than the Executive Committee. This structure facilitates effective oversight, further strengthens our Board’s independent leadership, and supports our commitment to enhancing shareholder value and strong governance. We believe that this structure is important due to the Company’s position as a leading global foodservice retailer, with more than 38,000 locations in over 100 countries. Our Chairman oversees our Board and facilitates the flow of information between management and our Board. This fosters open dialogue and constructive feedback among the independent Directors and management. Further, our Chairman leads a critical evaluation of Company management, business practices and culture, as well as oversight of Company strategy. Our Board assesses this leadership structure annually to confirm it continues to meet the evolving needs of the Company and its shareholders. Enrique Hernandez, Jr. has served as our Board’s independent Chairman since 2016 and brings strong continuity of leadership in light of our CEO leadership transition in 2019. Board Composition and Succession Planning Our Board is comprised of a diverse, highly-engaged group of Directors with a wide range of skills and experience who each contribute to overall Board and Committee effectiveness. Each of our Directors is a dynamic leader whose experiences and perspectives are continually evolving as he or she navigates today’s fast-paced, ever-changing business environment both as a Director of McDonald’s and in his or her other professional roles. Under our Corporate Governance Principles, our Governance Committee is primarily responsible for maintaining a strong and diverse Board through robust evaluation and succession planning processes, which include recommending Directors for re-election and identifying new candidates who will bring complementary skills and differentiated perspectives to our Board. Our Governance Committee evaluates and determines the most impactful and desirable mix of characteristics, skills, experience and diversity for our Board as a whole, as well as the qualifications and attributes of individual Directors and Director candidates. When selecting new Director candidates and recommending them to the full Board, our Governance Committee considers the qualifications discussed on page 13. Our Governance Committee also reviews each current Director’s contributions, considering the results of the most recent Board, Committee and peer evaluations, as further described on page 24. Our Governance Committee strives to achieve an appropriate balance of continuity and refreshment through a mix of newer and longer-tenured Directors. Our Governance Committee and Board believe that there should be a balance of institutional knowledge and fresh perspectives among our Directors, and that long tenure does not itself impair a Director’s independence and often enhances a Director’s ability to demonstrate independence. While our Governance Committee and Board consider tenure in evaluating the overall effectiveness of our Board, it is not a dispositive factor. Our Governance Committee and Board also consider each Director’s availability and willingness to serve on our Board, recognizing that it is a significant time commitment. Half of our Director nominees have joined our Board in the last five years. In January 2019, Paul Walsh joined our Board as a new independent Director. In November 2019, our President and CEO Christopher Kempczinski joined our Board, succeeding Stephen Easterbrook. Additionally, in December 2019, a new independent director, Catherine Engelbert, joined our Board. As the Company’s strategic priorities continue to evolve and in consideration of anticipated retirements and departures, our Governance Committee continues to proactively evaluate our Board’s composition and succession planning to facilitate a smooth transition of skills, experience and diversity in the boardroom.

  49. 2020 COMPENSATION PROGRAM CHANGES

    | 2020 Proxy Statement | | 21 |

  50. 2020 COMPENSATION PROGRAM CHANGES

    Board Diversity Our Governance Committee proactively seeks diverse Director candidates to provide representation of varied backgrounds, perspectives and experience in the boardroom to support the global demands of our business. Our Governance Committee and our Board consider diversity in a broad sense, including, among other attributes, leadership, experience, skills, perspectives, gender, ethnicity and geography. Our current Directors bring a diverse set of skills and experiences to the Company that are important to drive our strategy forward as the market and competitive landscape evolve. When seeking new Director candidates, our Governance Committee actively endeavors to include women, racial or ethnic minorities and geographically-diverse persons in the candidate pool. Our Governance Committee remains focused on enhancing the Board’s gender diversity, which was supported by the recent election of Catherine Engelbert to serve as a Director.

  51. 2020 COMPENSATION PROGRAM CHANGES

    | INDEPENDENT 11 of 12 All independent, except the CEO | WOMEN OR MINORITIES 50% | BALANCED EXPERIENCE |

  52. 2020 COMPENSATION PROGRAM CHANGES

    Director Independence Our Corporate Governance Principles require that all non-management Directors be independent under applicable law and listing standards, as well as under our Board’s Standards on Director Independence. Independence is determined by the Board after reviewing pertinent facts and circumstances and taking into consideration all applicable laws, regulations and stock exchange listing requirements, as well as the particular requirements under our Board’s Standards on Director Independence. This is important to ensure that Board representation is free of any relationship with the Company or our management that may impair, or appear to impair, a Director’s ability to make independent judgments. Our Board considers relationships involving Directors and their immediate family members and relies on information derived from Company records, questionnaires and other inquiries. The relationships reviewed by our Board in its most recent determination involved commercial relationships with companies at which Board members then served as employees, officers, partners or had a 10% or more interest. These commercial relationships involved McDonald’s purchases of products and services in the ordinary course of business that were made on arm’s-length terms in amounts and under other circumstances that did not affect Director independence. Based on its review, our Board determined that none of its non-management Directors has a material relationship with the Company and that all of them are independent. Currently, our non-management Directors are Lloyd Dean, Robert Eckert, Catherine Engelbert, Margaret Georgiadis, Enrique Hernandez, Jr., Richard Lenny, John Mulligan, Sheila Penrose, John Rogers, Jr., Paul Walsh and Miles White. The Board determined that our CEO, Christopher Kempczinski, is not independent. In addition, the Board previously determined that Jeanne Jackson, who served as Director during 2019 and did not stand for re-election at our 2019 Annual Shareholders’ Meeting, was independent, and that our former CEO and Director Stephen Easterbrook, who separated from the Company in November 2019, was not independent. Our Board’s Standards on Director Independence are available on the Company’s website at: http://corporate.mcdonalds.com/corpmcd/investors-relations/governance-principle-policies-and-guidelines.html.

  53. 2020 COMPENSATION PROGRAM CHANGES

    | 22 | | McDonald’s Corporation |

  54. 2020 COMPENSATION PROGRAM CHANGES

    Selection of New Director Candidates Our Governance Committee, together with our Board, maintains a robust policy for the consideration of potential outside Director candidates and is responsible for establishing criteria, screening candidates and evaluating the qualifications of persons who may be considered for service as a Director, including candidates nominated or suggested by shareholders. Our Governance Committee also retains independent third-party search firms, consultants and any other advisors as appropriate to help identify, screen and evaluate potential Director candidates and to enhance our Board’s preparedness in the event of an unanticipated Director departure. Since the last Annual Shareholders’ Meeting, our Board elected Christopher Kempczinski in connection with his appointment as President and CEO. Our Board also elected Catherine Engelbert, who was identified with the assistance of a third-party search firm. The following describes the Company’s selection process for new outside Directors:

  55. 2020 COMPENSATION PROGRAM CHANGES

    | Succession Planning | Our Governance Committee considers current and long-term needs of our evolving business and seeks potential Director candidates in light of emerging needs, current Board structure, tenure, skills, diversity and experience. | | | | | Identification of Candidates | Our Governance Committee engages in a search process to identify qualified Director candidates, which includes the use of an independent search firm to assess whether candidates’ skills, experience and background align with the Company’s business strategy. Our Governance Committee considers that all Directors and Director candidates should possess the certain qualifications and skills as described above under the heading “Director Qualifications.” | | | | | Meeting with Candidates | Potential Director candidates are interviewed by our Chairman, CEO and Governance Committee Chair. | | | | | Decision and Nomination | Our Governance Committee recommends, and the full Board nominates, the Director candidates best qualified to serve the interests of the Company and all shareholders. | | | | | Election | Shareholders consider the nominees and elect Directors at the Annual Shareholders’ Meeting to serve one-year terms. Our Board may also elect Directors on the recommendation of the Governance Committee throughout the year when determined to be in the best interests of the Company and our shareholders. |

  56. DIRECTOR ORIENTATION AND CONTINUING EDUCATION

    DIRECTOR ORIENTATION AND CONTINUING EDUCATION Upon joining our Board, Directors participate in an orientation, including introductions to members of our senior management and information about our operations, performance, strategic plans, and corporate governance practices. In addition, members of senior management and other speakers are periodically invited to attend portions of Board and Committee meetings to provide updates on business and general industry trends, governance, regulatory, legal and financial matters. Directors are also welcome to participate in continuing education programs to stay informed of developments in corporate governance and issues relating to the operation of public company boards. Directors also conduct periodic visits to our restaurants and, of course, are McDonald’s customers. For more information on how Directors oversee and are informed on Company strategy, see page 32. Director Compensation Non-management Directors are compensated for their service on our Board; however, Directors who are Company employees do not receive any compensation for their service as a Director. The Governance Committee annually evaluates the compensation for non-management Directors. Consistent with this practice, in 2019, the independent compensation consulting firm FW Cook performed a comprehensive review of non-management Director compensation, including benchmarking director compensation at peer and similarly sized companies, using the same peer group as is used for executive compensation review and described in the CD&A portion of this Proxy Statement. Informed by the results of this review, our Governance Committee recommended, and our Board approved, a modest increase to the amounts received under the existing Director compensation program, as reflected in the following paragraph. The Board believes this increase will maintain the Company’s competitive market position and best position the Company to attract new Director candidates and retain existing Directors. Effective July 2019, our Director compensation consists of: (i) an annual cash retainer of $115,000 (a $5,000 increase); (ii) an annual grant of common stock equivalent units with a value of $185,000 (a $10,000 increase) under the Directors’ Deferred Compensation Plan (Directors’ Plan); (iii) an annual cash retainer fee of $30,000 for our Audit & Finance Committee Chair; and (iv) an annual cash retainer fee of $25,000 for each Director serving as Chair of the Compensation, Governance, Public Policy & Strategy or Sustainability & Corporate Responsibility Committees. Directors serving for a portion of the year receive prorated compensation. The Company further matches up to $10,000 of charitable contributions made annually by Directors to certain types of tax-exempt organizations. Common stock equivalent units granted to non-management Directors are credited to an account in the Directors’ Plan that reflects the gains, losses and dividends associated with a notional investment in our common stock. In addition, non-management Directors may defer all or a portion of their cash retainers in the form of additional common stock equivalent units under the Directors’ Plan. Common stock equivalent units so credited are based on a per-share price equal to the closing price of our common stock on the date the units are credited. Amounts credited are deferred until retirement from the Board or a date specified by the Director. A Director may elect that all or a portion of the credited stock equivalents be paid in a lump sum or equal annual installments over a period of up to 15 years, beginning after retirement from the Board. In the event of death, amounts are paid in a lump sum. All amounts paid from the Directors’ Plan are paid in cash. In recognition of his 24 years of service on the Board and his leadership that helped the Company maintain strong financial performance, the disinterested members of our Board awarded Mr. Hernandez annual compensation for his service as Chairman. In 2016, the Board elected Mr. Hernandez as its Chairman amidst a turnaround and at a time that our CEO was relatively new in position. Mr. Hernandez has been re-elected as our Chairman of the Board each year since 2016 due to his record of accomplishments as a leader of our Board, his extensive knowledge of the Company’s operations and governance and his ability to mentor our CEOs. Mr. Hernandez has significant experience with Company strategy, business practices, and human capital management and he has facilitated strong independent Board oversight and fostered a proud Company culture during his tenure. In particular, during our recent CEO transition, Mr. Hernandez served as an invaluable resource to the Board, providing sound leadership in the boardroom during this critical period and working closely with management to execute our succession planning smoothly and effectively. He has and will continue to play a critical role in mentoring our new CEOs, as he has with our 8 CEOs since the time he joined our Board. For his service as Chairman, in May 2019, the disinterested members of the Board awarded Mr. Hernandez compensation of a $250,000 cash retainer and restricted stock units with a deemed grant date value of $250,000, which vest on the later of his retirement from the Board or the first anniversary of the grant date. The compensation for his Chairman role is unchanged since his appointment in 2016. This level of compensation highlights the significance of the Chairman’s role at McDonald’s, particularly through times of business turnaround, and Mr. Hernandez’s unique qualifications, including his Board leadership and business strengths.

  57. DIRECTOR ORIENTATION AND CONTINUING EDUCATION

    | Name | Fees earned or paid in cash ($)(1) | Stock awards ($)(2) | All other compensation ($)(3) | Total ($) | | Lloyd Dean | 112,269 | 179,575 | 697 | 292,541 | | Robert Eckert | 137,269 | 179,575 | 10,697 | 327,541 | | Catherine Engelbert(4) | 8,125 | 13,178 | 0 | 21,303 | | Margaret Georgiadis | 112,269 | 179,575 | 10,697 | 302,541 | | Enrique Hernandez, Jr. | 362,269 | 431,923 | 11,503 | 805,695 | | Jeanne Jackson(5) | 53,407 | 68,562 | 0 | 121,969 | | Richard Lenny | 127,379 | 179,575 | 10,697 | 317,651 | | John Mulligan | 142,269 | 179,575 | 10,697 | 332,541 | | Sheila Penrose | 137,269 | 179,575 | 10,697 | 327,541 | | John Rogers, Jr. | 112,269 | 179,575 | 20,697(6) | 312,541 | | Paul Walsh(7) | 108,297 | 173,342 | 7,267 | 288,906 | | Miles White | 137,269 | 179,575 | 10,697 | 327,541 |

  58. DIRECTOR ORIENTATION AND CONTINUING EDUCATION

    | As described above, Directors may defer all or a portion of their fees earned in the form of additional common stock equivalent units under the Directors’ Plan.(1) | | Amounts in this column represent the aggregate grant date fair value of common stock equivalent units computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 (ASC 718) and granted to each non-management Director who served on the Board during 2019. As discussed above, this column also includes 1,277 restricted units granted to Mr. Hernandez in connection with his service as Chairman, with an aggregate grant date fair value of $252,348 computed in accordance with ASC 718. These restricted stock units shall be payable in either shares of the Company’s stock or cash, at the Company’s discretion.(2) | | Represents the Company’s matching gifts of charitable contributions to tax-exempt organizations for participating Directors that were received in 2019, a McDonald’s gift card and nominal gifts received at the Board’s annual strategy session in connection with a visit to the Argentina market.(3) | | Ms. Engelbert joined the Board on December 6, 2019 and, therefore, received prorated compensation to reflect her service in 2019.(4) | | Ms. Jackson did not stand for re-election at the 2019 Annual Shareholders’ Meeting and received prorated compensation to reflect her service in 2019.(5) | | Includes a 2018 charitable gift matched by the Company in 2019.(6) | | Mr. Walsh joined the Board on January 14, 2019 and, therefore, received prorated compensation to reflect his service in 2019.(7) |

  59. CUMULATIVE OUTSTANDING STOCK AWARDS AS OF DECEMBER 31, 2019

    Shareholders are being asked to approve, on an advisory basis, the compensation of the named executive officers for 2019, as disclosed under Securities and Exchange Commission rules, including the Compensation Discussion and Analysis (CD&A), compensation tables, and related material disclosed in this Proxy Statement. As fully described in the CD&A, the Company’s executive compensation program supports the key elements of our business strategy and reflects our strong pay-for-performance alignment. Our program reflects industry best practices and includes a mix of annual- and long-term incentive plans with rigorous and objective performance goals for key metrics that drive business success and shareholder value. In 2019, the Company continued to execute its customer-centric growth strategy, producing strong financial results over both the one- and three-year periods ending 2019, as described in our CD&A. This performance resulted in above target payouts under both our annual and long-term incentive plans consistent with our pay-for-performance philosophy. The Company’s performance has driven an increase in shareholder value over both the one- and three-year periods. For the reasons expressed above and discussed in more detail in the CD&A, the Board believes the Company’s executive compensation program effectively motivates strong performance while balancing risk, thereby aligning the interests of executives with the interests of shareholders. Although this vote is advisory and non-binding, the Board values the opinion of shareholders and the Compensation Committee will review the voting results as well as our ongoing dialogue with shareholders when considering future executive compensation decisions. Consistent with the Company’s past practice, we currently hold our Say on Pay vote annually and the next Say on Pay vote is expected to occur at our 2021 annual meeting of shareholders. Compensation Committee Report The Compensation Committee (the Committee) of the Board of Directors has reviewed and discussed the Company’s Compensation Discussion and Analysis with McDonald’s management. Based on this review and discussion, the Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement and the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019. Respectfully submitted,

  60. FIRST PRINCIPLE: PAY-FOR-PERFORMANCE

    | | | | | 91% of CEO’s target direct compensation opportunity is performance-based** | | ** | This chart uses ASC 718 grant-date fair values for equity awards granted in 2019. |

  61. 2019 Key Financial Metrics*

    | Operating income growth and comparable guest count growth were used in our STIP while the other metrics were used in the performance-based restricted stock units (PRSUs) granted in 2019.* |

  62. SECOND PRINCIPLE: DRIVE BUSINESS RESULTS AND LONG-TERM SHAREHOLDER VALUE

    SECOND PRINCIPLE: DRIVE BUSINESS RESULTS AND LONG-TERM SHAREHOLDER VALUE While we believe it is important to reward success against short-term goals, our overall focus is on driving long-term shareholder value. The Committee regularly considers how the Company’s compensation program is aligned with and supports current business strategy. The Committee’s annual review of our executive compensation program confirmed that it is straightforward, holistic and incorporates multiple aspects of business performance in support of Company strategy. Further, to drive long-term value creation, we generally deliver approximately 75% of our CEO’s compensation opportunity in the form of equity awards that vest over several years. Mr. Kempczinski’s target total direct compensation is consistent with this breakdown in 2020, which will be his first full year as CEO.

  63. INCENTIVE AWARDS – 2019 PAYOUTS

    INCENTIVE AWARDS – 2019 PAYOUTS The Committee established meaningful stretch targets that were closely aligned with our annual and three-year business plans. Our Corporate STIP payout was above target (145.5%) due to strong operating income results across the world. The Company’s robust multi-year performance (2017-2019) also resulted in a payout significantly above target (161.8%) for the PRSUs that vested in early 2020.

  64. INCENTIVE AWARDS – 2019 PAYOUTS

    | 2019 CORPORATE STIP RESULTS | 2017-2019 PRSUs RESULTS | | | |

  65. INCENTIVE AWARDS – 2019 PAYOUTS

    | The 2019 operating income target and the operating income and net income results above have been adjusted in accordance with the Committee’s pre-established guidelines. Please see page 47 for further information regarding the Committee’s guidelines and 2019 operating income adjustments.* |

  66. INCENTIVE AWARDS – 2019 PAYOUTS

    | 42 | | McDonald’s Corporation |

  67. THIRD PRINCIPLE: PAY COMPETITIVELY

    | Input from our compensation consultant | FW Cook reviews and provides input on overall compensation design and management’s recommendations with respect to each of the NEOs at least annually. | Number of meetings: Five throughout 2019 Agendas: Determined by the Committee Chair with the assistance of our Chief People Officer Attendees: The Committee, members of management, including the Chief People Officer, as well as representatives from FW Cook, and when appropriate, other external professional advisors | | Other considerations | The Committee considers peer data and market benchmarking pay data obtained from various sources, including Willis Towers Watson, Aon and Meridian Compensation Partners, LLC. | | | Role of management | Management provides the Committee with its perspectives on compensation matters. No member of management is involved in decisions regarding their own compensation. | |

  68. SHORT-TERM CASH INCENTIVE (STIP)

    SHORT-TERM CASH INCENTIVE (STIP) Our 2019 STIP rewards growth in annual operating income and comparable guest counts (our core metrics), which measure the success of the most important elements of our business strategy. Operating income growth requires the Company to balance increases in revenue with financial discipline to produce strong margins and a high level of cash flow. The Committee continues to believe that driving operating income growth remains the primary indicator of Company performance, therefore it applied a 75% weighting to this metric. Comparable guest count growth is weighted at 25% to promote the long-term health of our business and support income growth. 2019 STIP payouts also consider our delivery sales results, which are closely aligned with a key business strategy and encourages the continued transition of our delivery initiative from restaurant deployment to sales growth. As a single modifier, delivery sales can increase or decrease the payout opportunity range by up to 25 percentage points. There is no positive impact from the modifier, however, if the operating income growth payout factor is below 50%. Individual STIP payouts are capped at 200% of target. 2019 STIP Target The chart below provides operating income and comparable guest count growth necessary to achieve threshold, target and maximum payouts under 2019 STIP for Corporate (prior to adjustment based on the delivery sales modifier):

  69. SHORT-TERM CASH INCENTIVE (STIP)

    | | Threshold | Target | Maximum | | Consolidated annual operating income growth* | 0% | 4.0% | 9.8% | | Comparable guest counts growth | 0% | 1.0% | 2.5% |

  70. SHORT-TERM CASH INCENTIVE (STIP)

    | Payout percentage interpolated for results that fall between each of the performance levels specifically identified. The operating income target was adjusted as discussed on page 47.* |

  71. SHORT-TERM CASH INCENTIVE (STIP)

    Performance Versus 2019 STIP Target The following table shows the operating income and comparable guest count targets and results under 2019 STIP for each of the segments. Although the underlying business momentum in the U.S remains positive, as a result of the completion of our refranchising strategy in 2018 and our U.S. EOTF strategy (specifically, lower gains on restaurant sales, higher depreciation expenses and the corresponding impact on Company’s financial performance), the Committee determined that a negative operating income growth target for the U.S. business was advisable.

  72. SHORT-TERM CASH INCENTIVE (STIP)

    | | Operating Income* (75% weighting) | | | | Comparable Guest Counts (25% weighting) | | | Dollars in millions | Target 2019 operating income ($) | Target 2019 operating income growth over 2018 (%) | 2019 adjusted operating income ($) | 2019 adjusted operating income growth over 2018 (%) | Target 2019 comparable guest count growth (%) | Actual 2019 comparable guest count growth (%) | | Corporate | 9,382 | 4.0 | 9,525 | 5.6 | 1.0 | 1.0 | | U.S. | 3,944 | (3.8) | 4,075 | (0.6) | 0.0 | (1.9) | | International Operated Markets (IOM) | 4,912 | 5.8 | 5,020 | 8.1 | 1.8 | 3.5 | | International Developmental Licensed Markets (IDL) | 1,241 | 7.3 | 1,266 | 9.5 | 1.5 | 2.2 |

  73. SHORT-TERM CASH INCENTIVE (STIP)

    | The 2019 operating income target and results above have been adjusted in accordance with the Committee’s pre-established guidelines. Please see page 47 for further information on the Committee’s guidelines as well as 2019 STIP adjustments.* |

  74. SHORT-TERM CASH INCENTIVE (STIP)

    | 2020 Proxy Statement | | 45 |

  75. SHORT-TERM CASH INCENTIVE (STIP)

    Individual 2019 STIP Payouts The 2019 STIP target and actual payouts for the NEOs are shown in the table below. Please see the notes to the Grants of Plan-Based Awards table on page 55 for more information regarding the team factors applicable to each NEO as well as the impact of the modifiers on these payouts.

  76. SHORT-TERM CASH INCENTIVE (STIP)

    | Named executive officer | Applicable team factor | Target STIP payment as percentage of salary (%) | 2019 target STIP payout ($) | 2019 STIP payout ($) | STIP payment as percentage of target (%) | | Christopher Kempczinski* | U.S. (56%) | 112 | 1,396,233 | 1,707,478 | 122.3 | | | Corporate (44%) | | | | | | Kevin Ozan | Corporate (100%) | 100 | 850,000 | 1,236,750 | 145.5 | | Joseph Erlinger* | IOM (61%) | 92 | 710,452 | 1,132,819 | 159.5 | | | U.S. (14%) | | | | | | | Corporate (25%) | | | | | | Jerome Krulewitch | Corporate (100%) | 85 | 552,500 | 803,888 | 145.5 | | Ian Borden** | IDL (75%) | 80 | 452,656 | 714,631 | 157.9 | | | Corporate (25%) | | | | | | Stephen Easterbrook*** | Corporate (100%) | 180 | 2,105,753 | 3,063,872 | 145.5 | | Silvia Lagnado**** | Corporate (100%) | 80 | 463,746 | 674,751 | 145.5 |

  77. SHORT-TERM CASH INCENTIVE (STIP)

    | In early 2019, the Committee determined to increase the STIP targets (compared to 2018) for each of Messrs. Kempczinski and Erlinger to remain competitive with pay levels at peer companies. The Committee increased the target from 90% to 100% for Mr. Kempczinski and from 80% to 90% for Mr. Erlinger. Effective November 1, 2019, their respective target bonus opportunity also increased upon promotion (to 170% in the case of Mr. Kempczinski and 100% in the case of Mr. Erlinger). As a result of these changes, their STIP payouts reflect blended metrics and targets as presented in the table above.* | | Mr. Borden’s 2019 STIP was not impacted by his promotion to President, International in late 2019. However, his target bonus opportunity for 2020 increased to reflect his additional responsibilities.** | | Mr. Easterbrook was terminated by the Company without cause on November 1, 2019. As a result, his STIP was reduced to reflect the portion of the year in which he was employed.*** | | Ms. Lagnado separated from the Company on October 31, 2019. As a result, her STIP was reduced to reflect the portion of the year in which she was employed.**** |

  78. Long-Term Incentive Compensation

    Long-Term Incentive Compensation

  79. Long-Term Incentive Compensation

    | Components of 2019 Long-Term Incentive Compensation | | | Performance-based RSUs | Stock Options | | Each component generally weighted equally | |

  80. Performance-Based Restricted Stock Units

    Performance-Based Restricted Stock Units PRSUs provide the right to receive a share of McDonald’s stock, subject to certain vesting requirements, and accrue dividend equivalent rights that are reinvested in additional PRSUs and earned in proportion to the percentage of PRSUs earned. PRSUs granted in 2019 as part of the annual cycle will vest on the third anniversary of the grant date, subject to the Company’s achievement of two key financial metrics, EPS growth and ROIIC. PRSUs are also subject to a modifier based on relative TSR over the 2019-2021 performance period. This balanced set of metrics encourages an increase in profitability and an efficient and effective use of capital, which will enhance shareholder value. Consistent with the Company’s cash return to shareholders philosophy, EPS targets incorporate the planned level of share repurchases during the performance period. As a result, the Company’s share repurchase activity has minimal impact on PRSU payouts. These awards also align the interests of our NEOs with those of our shareholders by delivering payouts in the form of Company stock.

  81. Performance-Based Restricted Stock Units

    | 46 | | McDonald’s Corporation |

  82. Performance-Based Restricted Stock Units

    Payout of the PRSUs is limited to 200% of the target award (calculated with a limit of 175% of target based on EPS and ROIIC, subject to a modifier of up to an additional 25% based on the Company’s cumulative TSR vs. the S&P 500 Index over the performance period), plus any dividend equivalents earned on the PRSUs. The following graphic details the RSUs vesting calculation. PRSUs granted in 2019 were, for the first time, subject to a cap of 100% of target if the Company’s absolute TSR for the three-year performance period is negative (notwithstanding performance against the measures described above). This change supports our commitment to ensuring that the interests of executives are aligned with those of our shareholders.

  83. Performance-Based Restricted Stock Units

    | 2019-2021 | Threshold | Target | Maximum | | Compound annual EPS growth | 3% | 9% | 13% | | 3-year ROIIC | 15% | 25% | 25% | | Cumulative TSR v. S&P 500 Index Modifier | | | | | 0 - 19%-ile | | | -25% | | 20 - 39%-ile | | | -12.5% | | 40 - 59%-ile | | | 0% | | 60 - 79%-ile | | | +12.5% | | 80 - 100%-ile | | | +25% |

  84. Performance-Based Restricted Stock Units

    In 2017, the Committee granted PRSUs to our executives, which were subject to compound annual net income growth, three-year ROIIC and Relative TSR over the 2017 to 2019 performance period. As both the Company’s net income growth and ROIIC exceeded targets (adjusted for the exclusions discussed on page 47) and the Company’s TSR was at the 80th percentile compared to the S&P 500 Index, please refer to page 42 for details, the PRSUs vested at 161.8% of the target amount in early 2020. In addition to the PRSUs awarded as part of the annual grant cycle, from time to time, an executive may receive an RSU award as part of a new hire package or as a retention or promotional incentive. Such RSU awards may be either performance- or time-based. The Committee did not grant a retention or promotional award to an executive in 2019.

  85. STOCK OPTIONS

    STOCK OPTIONS Options granted to our NEOs have an exercise price equal to the closing price of our common stock on the grant date and a term of ten years. Options vest ratably over four years subject to continued service. Options provide value only if our share price increases, thereby closely aligning executive pay with shareholder interests. The Company’s policies and practices regarding option grants, including the timing of grants and the determination of the exercise price, are described on page 52.

  86. STOCK OPTIONS

    | 7 | ADJUSTMENTS TO REPORTED RESULTS |

  87. STOCK OPTIONS

    In order to focus our executives on the fundamentals of the Company’s underlying business performance, certain adjustments that are not indicative of ongoing performance may be approved for purposes of incentive-based compensation. Our goal is to align incentive payouts with underlying business results that our investors use to measure performance, as opposed to allowing special gains or losses from having a significant impact on payouts. The Committee considers potential adjustments pursuant to pre-established guidelines, including materiality, to provide consistency in how the Committee views the business. The graphic below illustrates the three categories (“strategic”, “regulatory” and “external”) of items the Committee may exclude from financial results for purposes of determining incentive payouts. In addition, the Committee excludes the effects of foreign currency translation (either positive or negative) for purposes of incentive payouts since changes in foreign exchange rates may cause our reported results to appear more or less favorable than business fundamentals indicate. The Committee may approve adjustments to reflect events in the prior period and/or the results achieved during the applicable performance period to account for items not indicative of underlying performance, in STIP and/or PRSUs. Individual adjustments may have positive or negative impact, and in any given year, aggregate adjustments may increase or decrease incentive payouts. In establishing 2019 operating income threshold applicable to STIP, the Committee determined it was appropriate to exclude 2018 impairment and restructuring charges. This resulted in an increased threshold of operating income that was required to be achieved for an STIP payout to be earned. 2019 operating income thresholds did not include amounts related to any potential 2019 impairment charges because the associated transactions could not be predicted as to timing and amount. However, an expected gain on the planned sale of real estate assets in an international market was included in the target.

  88. STOCK OPTIONS

    | 2020 Proxy Statement | | 47 |

  89. STOCK OPTIONS

    In determining 2019 operating income results for STIP awards, the Committee adjusted performance to account for each of the items identified in the graphic below. Total adjustments for Corporate were less than 2% of the Company’s consolidated operating income for 2019.

  90. STOCK OPTIONS

    | 2019 STIP ADJUSTMENTS | | | | | | | | Category | Adjustments | Amount of Adjustment ($)* | | | STRATEGIC | Asset impairment and gains/losses related to strategic initiatives, including restructurings, acquisitions, divestitures and developmental licensee transactions | Net gain on sale of our former corporate headquarters ●Corporate – $26 million gain ●Corporate and US - $6 million loss | (20) | | | | | Transactional asset impairment charges and related gains/losses, primarily associated with the purchase of a joint venture partner’s interest in the India Delhi market (Corporate and IDL) | 83 | | | REGULATORY | Changes in tax or accounting law or regulations | | — | | | EXTERNAL | Extraordinary, unforeseeable events, such as natural disasters or the impact of social or political unrest that are outside of management’s control | Delay of a planned sale of real estate assets (Corporate) | 112 |

  91. STOCK OPTIONS

    | Pre-tax amounts in millions. The amounts in the table for each segment sum to the total adjustments identified below for the respective segment.* |

  92. STOCK OPTIONS

    The following chart provides the net adjustment (other than for foreign currency translation), by segment, made to 2019 operating income for purposes of calculating STIP payouts.

  93. STOCK OPTIONS

    | Corporate | + $175 million | | U.S. | + $6 million | | International Operated Markets (IOM) | $0 | | International Developmental Licensed Markets (IDL) | + $83 million |

  94. STOCK OPTIONS

    In determining net income and ROIIC results for 2017-2019 PRSU awards, the Committee adjusted performance consistent with the above pre-established guidelines, excluding the benefit provided by the 2017 U.S. Tax Cuts and Jobs Act as well as adjustments made to STIP awards relevant for this performance period. In the aggregate, the Committee’s adjustments decreased 2017-2019 PRSU payouts.

  95. STOCK OPTIONS

    | 8 | OTHER COMPENSATION ELEMENTS |

  96. Severance and Change in Control Arrangements

    Severance and Change in Control Arrangements The Company has a U.S. severance plan that covers all U.S-based officers, including our NEOs, except Mr. Borden. Benefits under the U.S. severance plan are described under “Potential Payments Upon Termination of Employment or Change in Control” starting on page 59. In the event of Mr. Borden’s departure, he may be entitled to receive payments and benefits, as required by local law. The Company does not have any change in control agreements. Further, we do not provide for any single-trigger change of control benefits or Section 280G tax gross-up payments.

  97. Severance and Change in Control Arrangements

    | 9 | 2020 CHANGES TO COMPENSATION PROGRAM |

  98. STIP

    STIP The Committee’s review of our incentive programs confirmed overall alignment with our compensation guiding principles. However, in order to better align our STIP with our business goals and shareholder interests, for 2020, the Company has added Systemwide sales growth as a core metric. Systemwide sales reflects sales across all McDonald’s restaurants (including conventional franchisee and developmental licensee sales), and they are the basis on which we calculate franchised revenue, which is important in a franchise business as income generation is closely correlated to sales growth. The Committee also removed the delivery sales modifier, which was effective in 2019 at accelerating delivery sales but is now embedded in our business plans. The weighting of our performance metrics for 2020 STIP will be operating income growth at 50%, comparable guest count growth at 25% and Systemwide sales growth at 25%. These three performance measures will focus executives on the most important aspects of Company performance and the Committee believes the mix of 2020 metrics appropriately balances top and bottom line measures to motivate our executives to drive sustainable and profitable growth.

  99. Silvia Lagnado

    Silvia Lagnado On October 31, 2019, Ms. Lagnado separated from the Company and entered into an agreement documenting her receipt of severance benefits provided for under the Company’s Officer Severance Plan as well as her equity award agreements, plus an additional amount of $30,000 to cover storage and other costs incidental to her separation. Ms. Lagnado agreed to a release of claims as well as various restrictive covenants, including an 18-month noncompete and nonsolicitation agreement, and perpetual confidentiality and nondisparagement covenants. Please refer to “Potential Payments Upon Termination of Employment or Change in Control” starting on page 59 for more details.

  100. Independent Compensation Consultant

    Independent Compensation Consultant The Committee has the sole authority to retain and dismiss an independent compensation consultant and has engaged FW Cook as its consultant. FW Cook also assists the Board in compiling and summarizing the results of Board and Director evaluations and advising on Director compensation. Consistent with its Charter, the Committee regularly considers FW Cook’s independence. In 2019, the Committee concluded that FW Cook is independent and that its work for the Committee did not raise any conflicts of interest. Management may not engage the Committee’s consultant for any purpose.

  101. Peer Companies

    Peer Companies Consistent with our goal of providing competitive compensation to incentivize and retain executive talent, we review total direct compensation compared to levels at peer companies that we believe are reflective of our business. When we set executive compensation targets, we use the market median for each compensation element as a reference point; however, we do not specifically target any element of compensation at the market median. Annually, based on input from FW Cook, the Committee selects a peer group comprised of companies with which we compete for talent, including our direct competitors, major retailers, producers of consumer branded goods and companies with a significant global presence. Although we strive for year-over-year continuity for our peer group, in 2018, the Committee, with the assistance of FW Cook, updated the peer group that applied for establishing 2019 compensation based on objective criteria to ensure a representative peer

  102. Peer Companies

    | 50 | | McDonald’s Corporation |

  103. Peer Companies

    group. In identifying the Company’s peer group, the Committee considered the Company’s industry classification (under the S&P’s Global Industry Classification Standard), the revenues and market capitalization of potential peer companies as well as peers of peers, among other criteria. The highlighted companies below were added for 2019, and we removed the companies noted below.

  104. Peer Companies

    | 3M Company | Lowe’s Companies, Inc. | Companies Removed From Peer Group | | Best Buy Co., Inc. | Marriott International, Inc. | Dunkin Brands Group, Inc. | | Carnival Corporation | Mondeléz International, Inc. | The Home Depot, Inc. | | The Coca-Cola Company | NIKE, Inc. | Restaurant Brands International, Inc. | | Colgate-Palmolive | PepsiCo | The Walt Disney Company | | FedEx Corporation | The Procter and Gamble Co. | The Wendy’s Company | | General Mills, Inc. | Starbucks Corporation | | | Johnson & Johnson | Target Corporation | | | Kellogg Company | Walgreens-Boots Alliance, Inc. | | | Kimberly-Clark Corporation | Walmart Inc. | | | The Kraft Heinz Company | Yum! Brands, Inc. | |

  105. Peer Companies

    The following table compares McDonald’s size and performance to that of our peer group.(1)

  106. Peer Companies

    | | McDonald’s | Percentile | Rank | | Revenues (most recent fiscal year) | $21,077 | | 16 of 23 | | Market Capitalization (12/31/19) | $148,819 | | 7 of 23 | | Systemwide sales (most recent fiscal year) | $100,178 | | 3 of 23 | | 1-year TSR (12/31/19) | 13.97% | | 17 of 23 | | 3-year TSR (12/31/19) | 74.84% | | 7 of 23 | | 5-year TSR (12/31/19) | 142.18% | | 2 of 23 |

  107. Peer Companies

    | Revenues and Systemwide sales information is for the most recent fiscal year available and market capitalization and TSR data is as of December 31, 2019. Amounts provided for revenues, market capitalization and Systemwide sales are in millions.(1) |

  108. Clawbacks and Forfeiture Provisions

    Clawbacks and Forfeiture Provisions The Company’s STIP awards and equity grant agreements for executives provide that the Company may terminate awards and/or recapture previously paid awards if a participant engages in willful fraud that: (i) causes harm to the Company or (ii) is intended to manipulate performance goals either during employment, or after employment has terminated. Furthermore, executives are required to have executed restrictive covenants as a condition to receiving equity awards. An executive who violates the restrictive covenants to which he or she is subject will forfeit outstanding equity awards, whether or not vested, and may be required to repay awards that have previously been paid. The Company’s equity grant agreements also contain a repayment/forfeiture provision that triggers repayment of any benefits received in connection with such grants as may be required to comply with (i) New York Stock Exchange listing standards adopted in accordance with Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (regarding recovery of erroneously awarded compensation) and any implementing rules and regulations of the Securities and Exchange Commission adopted thereunder, and (ii) similar rules under the laws of any other jurisdiction, as well as pursuant to any policies adopted by the Company to implement such requirements, in all cases to the extent determined by the Company to be applicable to the award recipient.

  109. Policies and Practices Regarding Equity Awards

    Policies and Practices Regarding Equity Awards The Company does not grant equity awards when in possession of material non-public information. The Company generally makes broad-based equity grants at approximately the same time each year following our release of full-year financial results, however, the Company may choose to make equity grants outside of the annual broad-based grant (e.g., as part of a new hire package or as a retention or promotional incentive). Stock options may be granted only with an exercise price at or above the closing market price of the Company’s stock on the date of grant.

  110. Policies and Practices Regarding Equity Awards

    | 52 | | McDonald’s Corporation |

  111. Policies and Practices Regarding Equity Awards

    Compensation Tables

  112. SUMMARY COMPENSATION TABLE

    SUMMARY COMPENSATION TABLE The table below summarizes the total compensation earned by our NEOs in 2019, and, to the extent required, 2018 and 2017.

  113. SUMMARY COMPENSATION TABLE

    | Name and principal position (a) | Year (b) | Salary ($)(c)(1)(5) | Stock awards ($)(e)(2) | Option Awards ($)(f)(3) | Non-equity incentive plan compensation ($)(g)(5) | | All other compensation ($)(i)(4)(5) | Total ($)(j)(5) | | Christopher Kempczinski* President and Chief Executive Officer | 2019 | 867,500 | 1,250,129 | 1,250,022 | Annual: | 1,707,478 | 154,026 | 5,229,155 | | | 2018 | 725,000 | 2,500,183 | 1,000,005 | Annual: | 336,869 | 116,283 | 4,678,340 | | | 2017 | 675,000 | 843,479 | 846,103 | Annual: | 813,291 | 120,846 | 3,847,453 | | | | | | | Long-term: | 548,734 | | | | | | | | | Total: | 1,362,025 | | | | Kevin Ozan Chief Financial Officer | 2019 | 841,667 | 1,625,078 | 1,625,011 | Annual: | 1,236,750 | 128,072 | 5,456,578 | | | 2018 | 791,667 | 1,450,043 | 1,450,015 | Annual: | 808,800 | 149,727 | 4,650,252 | | | 2017 | 741,667 | 1,204,846 | 1,208,724 | Annual: | 1,145,250 | 160,166 | 5,474,378 | | | | | | | Long-term: | 1,013,725 | | | | | | | | | Total: | 2,158,975 | | | | Joseph Erlinger* President, McDonald’s USA | 2019 | 712,500 | 850,088 | 850,022 | Annual: | 1,132,819 | 1,232,877 | 4,778,306 | | | 2018 | 587,500 | 750,055 | 750,009 | Annual: | 794,880 | 1,075,292 | 3,957,736 | | Jerome Krulewitch General Counsel and Secretary | 2019 | 642,500 | 850,088 | 850,022 | Annual: | 803,888 | 104,923 | 3,251,421 | | Ian Borden* President, International | 2019 | 561,329 | 750,078 | 750,003 | Annual: | 714,631 | 470,856 | 3,246,897 | | Stephen Easterbrook Former President and Chief Executive Officer | 2019 | 1,163,718 | 6,125,006 | 6,125,005 | Annual: | 3,063,872 | 954,805 | 17,432,406 | | | 2018 | 1,341,667 | 5,750,104 | 5,750,009 | Annual: | 2,456,730 | 577,606 | 15,876,116 | | | 2017 | 1,300,000 | 5,301,249 | 5,318,329 | Annual: | 3,473,925 | 743,905 | 21,761,052 | | | | | | | Long-term: | 5,623,644 | | | | | | | | | Total: | 9,097,569 | | | | Silvia Lagnado Former Chief Marketing Officer | 2019 | 575,667 | 850,088 | 850,022 | Annual: | 674,751 | 114,038 | 3,064,566 | | | 2018 | 665,000 | 750,055 | 750,009 | Annual: | 541,896 | 148,014 | 2,854,974 | | | 2017 | 636,333 | 1,238,665 | 604,362 | Annual: | 781,824 | 123,098 | 3,973,663 | | | | | | | Long-term: | 589,381 | | | | | | | | | Total: | 1,371,205 | | |

  114. SUMMARY COMPENSATION TABLE

    | Effective November 2019, Mr. Kempczinski was appointed the Company’s President and CEO, and Mr. Erlinger was appointed President, McDonald’s USA. Effective December 2019, Mr. Borden was appointed President, International.* | | Reflects increases in base salary that took effect during 2019. Annual base salaries as of December 31, 2019 for those named executives still employed with the Company as of that date were as follows: Messrs. Kempczinski: $1,250,000; Ozan: $850,000; Erlinger: $775,000; Krulewitch: $650,000; and Borden: $565,820 (CAD 735,000).(1) | | Represents the aggregate grant date fair value of performance-based restricted stock units (PRSUs) granted under the McDonald’s Corporation 2012 Omnibus Stock Ownership Plan (2012 Plan) based on the probable outcome of the applicable performance conditions and excluding the effect of estimated forfeitures during the applicable vesting periods of PRSUs, as computed in accordance with Accounting Standards Codification (ASC) 718. Values are based on the closing price of the Company’s common stock on the grant date. PRSUs vest on the third anniversary of the grant date and are subject to performance-based vesting conditions linked to the achievement of EPS, ROIIC, and a relative TSR modifier over the performance period (as described on pages 46 and 47). For the first time in 2019, the PRSUs were subject to a cap of 100% of target if the Company’s absolute TSR for the three-year performance period is negative. The fair value of PRSUs that include the TSR modifier is determined using a Monte Carlo valuation model.(2) | | This also includes, for Mr. Kempczinski in 2018, a grant of special 9,507 RSUs, which are service based, and which vest in full on the third anniversary of the date of grant. Additional information is disclosed in the Grants of Plan-Based Awards table on page 55 and the Outstanding Equity Awards at 2019 Year-End table starting on page 56. | | A more detailed discussion of the assumptions used in the valuation of RSU awards (including PRSUs) may be found in the Notes to Consolidated Financial Statements under “Share-based Compensation” on pages 44 and 53 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. | | Represents the aggregate grant date fair value of options granted under the 2012 Plan, excluding the effect of estimated forfeitures during the applicable vesting periods of options, as computed in accordance with ASC 718. Options have an exercise price equal to the closing price of the Company’s common stock on the grant date, vest in equal installments over a four-year period and are subject to the 2012 Plan, as applicable. Values for options granted in 2019 are determined using a closed-form pricing model based on the following assumptions, as described in the footnotes to the consolidated financial statements: expected volatility based on historical experience of 18.94%; an expected annual dividend yield of 2.66%; a risk-free return of 2.54%; and expected option life based on historical experience of 5.77 years. Additional information about options is disclosed in the Grants of Plan-Based Awards table on page 55 and the Outstanding Equity Awards at 2019 Year-End table starting on page 56. A more detailed discussion of the assumptions used in the valuation of option awards may be found in the Notes to Consolidated Financial Statements under “Share-based Compensation” on pages 44 and 53 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.(3) |

  115. SUMMARY COMPENSATION TABLE

    | 2020 Proxy Statement | | 53 |

  116. SUMMARY COMPENSATION TABLE

    | “All other compensation” for 2019 includes the Company’s contributions to the McDonald’s Corporation 401(k) Plan (401k Plan) and Deferred Compensation Plan, except for Mr. Borden, who participates in our Canadian retirement plan, as follows:(4) |

  117. SUMMARY COMPENSATION TABLE

    | Christopher Kempczinski | $72,262 | | Joseph Erlinger | $90,443 | | Kevin Ozan | $99,028 | | Jerome Krulewitch | $69,744 | | Ian Borden | $10,481 | | Stephen Easterbrook | $217,227 | | Silvia Lagnado | $69,463 |

  118. SUMMARY COMPENSATION TABLE

    | The amounts in this column also include the following categories of perquisites: car allowance; financial planning; annual physical examinations for the executives and their spouses; executive security (for select executives); matching charitable donations; Company-paid life insurance; and personal use of the Company’s aircraft by the CEO, with a net cost to the Company in 2019 for Mr. Easterbrook of $717,993 and for Mr. Kempczinski of $49,645 (as more fully described on page 49, beginning in 2020, the Company requires full reimbursement of costs associated with personal use once the Company’s cost reaches a predetermined threshold). In 2019, our policy required the CEO to use the Company’s aircraft for all air travel and requires the CEO reimburse the Company on all personal travel (in accordance with Federal Aviation Administration regulations). In certain circumstances, the CEO may permit other executives to use the aircraft for personal travel or to be joined by their spouses on the aircraft for business travel. The Company does not provide any tax gross-ups on the perquisites described above. | | The incremental cost of perquisites is included in the amount provided in the table and based on actual charges to the Company, and for corporate aircraft includes fuel, on-board catering, landing/handling fees, maintenance costs and crew costs attributable to personal flights and excludes fixed costs, such as pilot salaries and the cost of the aircraft. In accordance with Company policy, any executive who is permitted per the above to use the Company’s aircraft for personal use reimbursed the Company for a portion of personal use of the corporate aircraft, calculated as the lower of (i) amount determined under the Code based on two times the standard industry fare level rate per person or (ii) 200% of the actual fuel cost, plus any excise tax amounts. | | Because Messrs. Erlinger and Borden were based overseas in 2019, the amount in this column includes certain benefits in connection with their international assignments including: Company-provided housing (in the amount of $344,270 and $253,458 for each of Messrs. Erlinger and Borden respectively, which includes: rent, rental furniture, utilities, lease renewal fees and council tax); a cost-of-living adjustment (in the amount of $73,229 for Mr. Borden); children’s tuition payments (in the amount of $100,044 and $47,616 for Messrs. Erlinger and Borden respectively); a family allowance; a global banking allowance; global health insurance, shipment of household goods; home leave travel; relocation allowance and assistance; departure services; tax preparation services; and tax equalization (in the amount of $535,106 for Mr. Erlinger). | | The amount paid to Ms. Lagnado includes payments in connection with her separation, including storage fees and other administrative costs. | | Certain amounts were paid in non-US currency. In these cases, when the information is available, the amounts reported reflect the exchange rate on the date the respective payments were made, and when the information is not available, the amounts reported reflect the average monthly exchange rate.(5) |

  119. SUMMARY COMPENSATION TABLE

    | 54 | | McDonald’s Corporation |

  120. GRANTS OF PLAN-BASED AWARDS

    GRANTS OF PLAN-BASED AWARDS

  121. GRANTS OF PLAN-BASED AWARDS

    | | | | Estimated future payouts under non-equity incentive plan awards(1) | | | Estimated future payouts under equity incentive plan awards(2) | | | All other stock awards: number of shares of stock or units (#)(i) | All other option awards: number of securities underlying option (#)(j) | Exercise or base price of option awards ($/Sh) (k) | Grant date fair value of stock and option awards ($)(l)(3) | | Name (a) | Plan | Grant date (b) | Threshold ($)(c) | Target ($)(d) | Maximum ($)(e) | Threshold (#)(f) | Target (#)(g) | Maximum (#)(h) | | | | | | Christopher Kempczinski | 2019 STIP | 2/13/2019 | 0 | 1,396,233 | 2,792,466 | | | | | | | | | | Equity Plan(4) | 2/13/2019 | | | | 0 | 6,975 | 13,950 | | | | 1,250,129 | | | Equity Plan(5) | 2/13/2019 | | | | | | | | 48,829 | 174.15 | 1,250,022 | | Kevin Ozan | 2019 STIP | 2/13/2019 | 0 | 850,000 | 1,700,000 | | | | | | | | | | Equity Plan(4) | 2/13/2019 | | | | 0 | 9,067 | 18,134 | | | | 1,625,078 | | | Equity Plan(5) | 2/13/2019 | | | | | | | | 63,477 | 174.15 | 1,625,011 | | Joseph Erlinger | 2019 STIP | 2/13/2019 | 0 | 710,452 | 1,420,904 | | | | | | | | | | Equity Plan(4) | 2/13/2019 | | | | 0 | 4,743 | 9,486 | | | | 850,088 | | | Equity Plan(5) | 2/13/2019 | | | | | | | | 33,204 | 174.15 | 850,022 | | Jerome Krulewitch | 2019 STIP | 2/13/2019 | 0 | 552,500 | 1,105,000 | | | | | | | | | | Equity Plan(4) | 2/13/2019 | | | | 0 | 4,743 | 9,486 | | | | 850,088 | | | Equity Plan(5) | 2/13/2019 | | | | | | | | 33,204 | 174.15 | 850,022 | | Ian Borden | 2019 STIP | 2/13/2019 | 0 | 452,656 | 905,312 | | | | | | | | | | Equity Plan(4) | 2/13/2019 | | | | 0 | 4,185 | 8,370 | | | | 750,078 | | | Equity Plan(5) | 2/13/2019 | | | | | | | | 29,297 | 174.15 | 750,003 | | Stephen Easterbrook | 2019 STIP | 2/13/2019 | 0 | 2,105,753 | 4,211,506 | | | | | | | | | | Equity Plan(4) | 2/13/2019 | | | | 0 | 34,174 | 68,348 | | | | 6,125,006 | | | Equity Plan(5) | 2/13/2019 | | | | | | | | 239,258 | 174.15 | 6,125,005 | | Silvia Lagnado | 2019 STIP | 2/13/2019 | 0 | 463,746 | 927,492 | | | | | | | | | | Equity Plan(4) | 2/13/2019 | | | | 0 | 4,743 | 9,486 | | | | 850,088 | | | Equity Plan(5) | 2/13/2019 | | | | | | | | 33,204 | 174.15 | 850,022 |

  122. GRANTS OF PLAN-BASED AWARDS

    | Each of the NEOs received an annual cash award under the STIP. Columns (d) and (e) show the target and maximum awards they could have earned. Actual STIP payouts are in column (g) of the Summary Compensation Table. STIP awards for 2019 were established based on a percentage of salary. STIP measures performance initially determined based on growth in operating income (75%) and comparable guest counts (25%). See the Compensation Discussion and Analysis at pages 44-47 for a discussion of operating income targets, as adjusted for certain exclusions, and comparable guest counts targets. Upon achievement of sufficient core metric growth, a single delivery sales modifier for 2019 was applied. The maximum STIP payout is 200% of target.(1) | | All of the NEOs received two types of equity awards: PRSUs (see columns (f), (g), (h) and (l)) and options (see columns (j), (k) and (l)).(2) | | The values in this column for PRSUs and options were determined based on the assumptions described in footnotes 2 and 3, respectively, to the Summary Compensation Table.(3) | | The PRSUs vest on February 13, 2022, subject to achievement of 3-year compound annual EPS growth of at least 3% and 3-year ROIIC of at least 15%. If EPS growth is at or above the 3% threshold, a relative TSR modifier can impact final payouts by up to plus or minus 25 percentage points. The maximum payout is 200% of target. However, if absolute TSR for the three year period is negative the maximum payout is 100% of target. These PRSUs also provide for dividend equivalent rights. See page 47 for more information.(4) | | For details regarding options, refer to footnote 3 to the Summary Compensation Table.(5) |

  123. GRANTS OF PLAN-BASED AWARDS

    | 2020 Proxy Statement | | 55 |

  124. OUTSTANDING EQUITY AWARDS AT 2019 YEAR-END

    OUTSTANDING EQUITY AWARDS AT 2019 YEAR-END

  125. OUTSTANDING EQUITY AWARDS AT 2019 YEAR-END

    | | Option awards | | | | Stock awards | | | | | Name (a) | Number of securities underlying unexercised options exercisable (#)(b)(1) | Number of securities underlying unexercised options unexercisable (#)(c)(1) | Option exercise price ($)(e) | Option expiration date (f) | Number of shares or units of stock that have not vested (#)(g)(2) | Market value of shares or units of stock that have not vested ($)(h)(3) | Equity incentive plan awards: number of unearned shares, units or other rights that have not vested (#)(i)(4) | Equity incentive plan awards: market or payout value of unearned shares, units or other rights that have not vested ($)(j)(3)(4) | | Christopher Kempczinski | 9,291 | 0 | 112.11 | 11/12/2025 | | | | | | | 26,277 | 26,276 | 128.09 | 3/8/2027 | | | | | | | 10,505 | 31,512 | 157.79 | 2/19/2028 | 9,982 | 1,972,607 | | | | | 0 | 48,829 | 174.15 | 2/13/2029 | | | 20,602 | 4,071,169 | | Kevin Ozan | 11,329 | 0 | 94.89 | 2/12/2024 | | | | | | | 36,320 | 0 | 97.15 | 3/16/2025 | | | | | | | 53,541 | 17,847 | 116.73 | 2/11/2026 | | | | | | | 37,538 | 37,538 | 128.09 | 3/8/2027 | | | | | | | 15,232 | 45,693 | 157.79 | 2/19/2028 | | | | | | | 0 | 63,477 | 174.15 | 2/13/2029 | | | 28,653 | 5,662,171 | | Joseph Erlinger | 7,377 | 0 | 94.89 | 2/12/2024 | | | | | | | 8,324 | 0 | 97.15 | 3/16/2025 | | | | | | | 5,890 | 1,963 | 116.73 | 2/11/2026 | | | | | | | 13,514 | 13,514 | 128.09 | 3/8/2027 | | | | | | | 7,879 | 23,634 | 157.79 | 2/19/2028 | | | | | | | 0 | 33,204 | 174.15 | 2/13/2029 | | | 13,342 | 2,636,425 | | Jerome Krulewitch | 9,309 | 0 | 94.00 | 2/13/2023 | | | | | | | 10,012 | 0 | 94.89 | 2/12/2024 | | | | | | | 10,594 | 0 | 97.15 | 3/16/2025 | | | | | | | 10,709 | 3,569 | 116.73 | 2/11/2026 | | | | | | | 13,514 | 13,514 | 128.09 | 3/8/2027 | | | | | | | 7,879 | 23,634 | 157.79 | 2/19/2028 | | | | | | | 0 | 33,204 | 174.15 | 2/13/2029 | | | 13,342 | 2,636,425 |

  126. OUTSTANDING EQUITY AWARDS AT 2019 YEAR-END

    | 56 | | McDonald’s Corporation |

  127. OUTSTANDING EQUITY AWARDS AT 2019 YEAR-END

    | | Option awards | | | | Stock awards | | | | | Name (a) | Number of securities underlying unexercised options exercisable (#)(b)(1) | Number of securities underlying unexercised options unexercisable (#)(c)(1) | Option exercise price ($)(e) | Option expiration date (f) | Number of shares or units of stock that have not vested (#)(g)(2) | Market value of shares or units of stock that have not vested ($)(h)(3) | Equity incentive plan awards: number of unearned shares, units or other rights that have not vested (#)(i)(4) | Equity incentive plan awards: market or payout value of unearned shares, units or other rights that have not vested ($)(j)(3)(4) | | Ian Borden | 4,149 | 0 | 75.93 | 2/9/2021 | | | | | | | 5,948 | 0 | 100.05 | 2/8/2022 | | | | | | | 5,320 | 0 | 94.00 | 2/13/2023 | | | | | | | 5,796 | 0 | 94.89 | 2/12/2024 | | | | | | | 7,264 | 0 | 97.15 | 3/16/2025 | | | | | | | 12,851 | 4,283 | 116.73 | 2/11/2026 | | | | | | | 13,514 | 13,514 | 128.09 | 3/8/2027 | | | | | | | 6,566 | 19,695 | 157.79 | 2/19/2028 | | | | | | | 0 | 29,297 | 174.15 | 2/13/2029 | | | 11,942 | 2,359,802 | | Stephen Easterbrook | 50,444 | 0 | 97.15 | 11/1/2022 | | | | | | | 71,388 | 71,388 | 116.73 | 11/1/2022 | | | | | | | 165,167 | 165,164 | 128.09 | 11/1/2022 | | | | | | | 60,400 | 181,197 | 157.79 | 11/1/2022 | | | | | | | 0 | 179,444 | 174.15 | 11/1/2022 | | | 72,163 | 14,260,130 | | Silvia Lagnado | 20,814 | 0 | 98.92 | 10/31/2021 | | | | | | | 19,275 | 6,425 | 116.73 | 10/31/2021 | | | | | | | 0 | 18,768 | 128.09 | 10/31/2021 | | | | | | | 0 | 15,756 | 157.79 | 10/31/2021 | | | | | | | 0 | 16,602 | 174.15 | 10/31/2021 | | | 8,427 | 1,665,259 |

  128. OUTSTANDING EQUITY AWARDS AT 2019 YEAR-END

    | In general, options expire on the tenth anniversary of grant. For details regarding customary equity treatment upon termination, see the section on Potential Payments Upon Termination of Employment or Change in Control beginning on page 59.(1) | | PRSUs are typically granted to our NEOs subject to performance-based vesting conditions, but from time to time, we grant service-based awards. In 2018 Mr. Kempczinski received a grant of 9,507 shares of service-vested RSUs (which have dividend equivalent rights), as reflected in columns (g) and (h), and which vest on February 19, 2021.(2) | | Calculated by multiplying the number of shares covered by the award by $197.61, the closing price of Company stock on the New York Stock Exchange on December 31, 2019, the last trading day in 2019.(3) | | Reflects unvested PRSUs that are scheduled to be paid out as follows if the targets are met:(4) |

  129. OUTSTANDING EQUITY AWARDS AT 2019 YEAR-END

    | Named executive officer | Vesting date | Number of performance-based RSUs | | Christopher Kempczinski | 03/08/2020 | 6,832* | | | 02/19/2021 | 6,628 | | | 02/13/2022 | 7,142 | | Kevin Ozan | 03/08/2020 | 9,759* | | | 02/19/2021 | 9,610 | | | 02/13/2022 | 9,285 | | Joseph Erlinger | 03/08/2020 | 3,514* | | | 02/19/2021 | 4,971 | | | 02/13/2022 | 4,857 | | Jerome Krulewitch | 03/08/2020 | 3,514* | | | 02/19/2021 | 4,971 | | | 02/13/2022 | 4,857 | | Ian Borden | 03/08/2020 | 3,514* | | | 02/19/2021 | 4,142 | | | 02/13/2022 | 4,285 |

  130. OUTSTANDING EQUITY AWARDS AT 2019 YEAR-END

    | 2020 Proxy Statement | | 57 |

  131. OUTSTANDING EQUITY AWARDS AT 2019 YEAR-END

    | Named executive officer | Vesting date | Number of performance-based RSUs | | Stephen Easterbrook** | 03/08/2020 | 39,361* | | | 02/19/2021 | 23,142 | | | 02/13/2022 | 9,660 | | Silvia Lagnado** | 03/08/2020 | 4,338* | | | 02/19/2021 | 2,882 | | | 02/13/2022 | 1,207 |

  132. OUTSTANDING EQUITY AWARDS AT 2019 YEAR-END

    | Represents the target number of PRSUs awarded, as a result of the Company’s performance during the 2017 - 2019 performance period, 161.8% of these PRSUs vested.* | | The number of PRSUs that may vest have been prorated to reflect the portion of the service period in which the executive was employed with the Company.** |

  133. OPTION EXERCISES AND STOCK VESTED - FISCAL 2019

    OPTION EXERCISES AND STOCK VESTED - FISCAL 2019

  134. OPTION EXERCISES AND STOCK VESTED - FISCAL 2019

    | | Option awards | | Stock awards | | | Name (a) | Number of shares acquired on exercise (#)(b) | Value realized on exercise ($)(c) | Number of shares acquired on vesting (#)(d) | Value realized on vesting ($)(e) | | Christopher Kempczinski | 27,875 | 2,316,300 | 9,662 | 1,682,637 | | Kevin Ozan | 30,930 | 3,028,609 | 18,559 | 3,232,050 | | Joseph Erlinger | 21,683 | 2,223,857 | 1,178 | 205,278 | | Jerome Krulewitch | 18,384 | 1,773,339 | 3,213 | 559,544 | | Ian Borden | 4,149 | 564,140 | 4,456 | 776,012 | | Stephen Easterbrook | 0 | 0 | 74,232 | 12,927,503 | | Silvia Lagnado | 26,649 | 2,017,459 | 6,683 | 1,163,844 |

  135. NON-QUALIFIED DEFERRED COMPENSATION - FISCAL 2019

    NON-QUALIFIED DEFERRED COMPENSATION - FISCAL 2019

  136. NON-QUALIFIED DEFERRED COMPENSATION - FISCAL 2019

    | Name (a) | Executive contributions in last FY ($)(b)(1) | Registrant contributions in last FY ($)(c)(1) | Aggregate earnings in last FY ($)(d) | Aggregate withdrawals/ distributions ($)(e) | Aggregate balance at last FYE ($)(f)(2) | | Christopher Kempczinski | 393,996 | 55,462 | 191,268 | 0 | 1,429,504 | | Kevin Ozan | 95,933 | 82,228 | 516,104 | 0 | 4,719,949 | | Joseph Erlinger | 293,720 | 73,643 | 394,080 | 0 | 2,241,749 | | Jerome Krulewitch | 61,769 | 52,944 | 564,522 | 0 | 4,556,105 | | Ian Borden* | — | — | — | — | — | | Stephen Easterbrook | 200,427 | 200,427 | 19,543 | 0 | 2,143,368 | | Silvia Lagnado | 651,149 | 52,663 | 605,424 | 0 | 3,544,625 |

  137. NON-QUALIFIED DEFERRED COMPENSATION - FISCAL 2019

    | Mr. Borden is not eligible to participate in the Company’s non-qualified deferred compensation plan.* | | Represents salary deferrals which are also reported as compensation for 2019 in the Summary Compensation Table.(1) | | Includes the following aggregate amounts reported in the Summary Compensation Table in prior years:(2) |

  138. NON-QUALIFIED DEFERRED COMPENSATION - FISCAL 2019

    | Christopher Kempczinski | $805,441 | | Kevin Ozan | $1,161,220 | | Joseph Erlinger | $250,746 | | Jerome Krulewitch | $0 | | Ian Borden | $0 | | Stephen Easterbrook | $1,686,347 | | Silvia Lagnado | $1,100,259 |

  139. NON-QUALIFIED DEFERRED COMPENSATION - FISCAL 2019

    | 58 | | McDonald’s Corporation |

  140. POTENTIAL PAYMENTS UPON TERMINATION OF EMPLOYMENT OR CHANGE IN CONTROL

    POTENTIAL PAYMENTS UPON TERMINATION OF EMPLOYMENT OR CHANGE IN CONTROL Our NEOs are entitled to certain payments and benefits in connection with a termination of employment or change in control followed by termination of employment, as described below. The post-termination arrangements for Mr. Easterbrook and Ms. Lagnado, who separated from the Company on November 1, 2019 and October 31, 2019, respectively, are also discussed on page 62.

  141. PAY RATIO

    PAY RATIO

  142. 2020 Pay Ratio

    2020 Pay Ratio McDonald’s is committed to a strong pay-for-performance culture that stresses paying compensation based on performance in order to closely align the interests of executives with those of shareholders. In setting CEO compensation, we strive to ensure that over 90% of our CEO’s total target direct compensation opportunity is subject to performance against the Company’s robust objective targets. Over the past four years, McDonald’s has revitalized its brand and business, successfully completing a transition from turnaround to growth and experiencing 18 consecutive quarters of global comparable sales growth. On November 1, 2019, Christopher Kempczinski succeeded Stephen Easterbrook as the Company’s President and Chief Executive Officer. As the Company had two CEO’s during 2019, for purposes of calculating the pay ratio, we combined the compensation that each of Messrs. Kempczinski and Easterbrook earned during their time served as CEO (60 days for Mr. Kempczinski and 305 days for Mr. Easterbrook). Specifically, we prorated the respective amounts of 2019 salary, annual bonus and all other compensation by the portion of the year in which they served as CEO, applying the increased salary and annual bonus awarded to Mr. Kempczinski in connection with his promotion. Mr. Easterbrook’s equity awards were included in full, as he was in the role of CEO on the annual grant date. Based upon this calculation method, the CEO’s 2019 total compensation was $18,012,549, resulting in a ratio of 1,939:1.

  143. Audit & Finance Committee Matters

    | Ms. Engelbert was appointed to the Audit & Finance Committee effective March 1, 2020 and therefore is not listed as an Audit & Finance Committee member participant for the purposes of Audit & Finance Committee Report on matters related to fiscal year 2019.* | | Ms. Penrose no longer serves on the Audit & Finance Committee effective March 1, 2020 but is listed on this Audit & Finance Committee Report as a member of the committee at the time the matters in this report were discussed.** |